Payments
UK interchange fee caps: what they cover and why your bill can be higher
The 0.2% and 0.3% interchange caps do not cap the whole cost of accepting a card. Learn what they cover and why the cards customers use can affect your bill.
Written by Jessica Gardner, In-house Editor, Reeve Consult · 2 min read
Updated
Why can your card processing rate be higher than the interchange cap?
Interchange is one component of a card payment’s cost. UK rules cap interchange on qualifying domestic consumer debit and credit transactions at 0.2% and 0.3% respectively; scheme charges and the provider’s fees are separate. Commercial cards and cross-border transactions need their own treatment. The caps therefore do not limit your complete merchant service charge to those percentages.
- The card and transaction determine whether a particular cap applies.
- Blended and interchange-plus pricing present costs differently.
- A comparison needs the same card mix as well as the same turnover.
The published interchange caps can look much lower than a merchant's complete card rate. They measure a particular component, for qualifying transactions, rather than every charge involved in accepting a payment.
What is interchange?
It is a fee between the acquiring side and the issuer of the customer's card. Scheme charges and the payment provider's service contribute separately to merchant pricing. Providers may combine those costs or itemise them.
The PSR's Interchange Fee Regulation information explains the scope of the UK rules. The domestic consumer debit and credit caps are 0.2% and 0.3% respectively where the transaction qualifies.
What do those percentages mean in a calculation?
On an illustrative qualifying £50 debit transaction, 0.2% is 10p. On a qualifying £50 credit transaction, 0.3% is 15p. Those are interchange amounts, not the entire fee the merchant necessarily pays.
If a statement shows a complete rate above either figure, that alone is not evidence that a cap was breached. Other components and the card mix need examining.
Find out what each charge pays for, how to calculate your overall rate and which questions to ask your provider.
Which transactions need separate treatment?
Commercial cards fall outside those consumer-card caps. Cross-border transactions also need the applicable rules checked rather than assuming the domestic treatment.
For example, a trade supplier and a business serving mainly household customers can have different card mixes. A comparison based only on turnover can miss the effect of those differences.
How does the pricing model affect what you see?
Interchange-plus pricing can identify pass-through components and the provider's agreed charge. Blended pricing combines relevant costs into quoted rates. Both need the actual fee schedule to understand equipment, fixed and event-related charges.
One model is not automatically cheaper for every business. Ask providers to price the same payment activity and show the complete result.
What can you ask your provider?
Ask which card types contributed to the month's costs and which rates were applied. If something is unclear, identify the statement line and transaction category you want explained.
Reeve Consult can discuss the statement alongside a written DOJO proposal. The comparison should show complete charges and service differences without treating an interchange cap as a promise about the total rate.
Frequently asked questions
Straight answers
Are commercial cards covered by the domestic consumer interchange caps?
Is interchange-plus always cheaper than blended pricing?
Next step
Which part of your payment setup would you like to improve?
Tell us where customers pay, which till you use and which charges you want explained. We can discuss the options and arrange a statement review.
Request a payment reviewJessica Gardner is the in-house editor at Reeve Consult. She writes and edits every guide, blog post, and resource published on the site, making sure the writing is plain-English, the facts check out, and the advice is genuinely useful for the UK independent business owners we work with. Jessica spent eight years in editorial roles across UK trade and business publications before joining Reeve Consult.